Is Google’s search manipulation hurting consumers?

Way back in 1998 when Google launched, its core product was search and its main customer was the user. Throughout its early years, the company was laser focused on making the best search engine and refining the content it surfaced PageRank. Google wanted to perfect search so that users could find the best results based on an unbiased algorithm.

Almost 15 years later, Google has morphed into a search engine, advertising platform, software developer, hardware developer, game and app developer, mobile operating system developer, Web browser, video host, blog platform, social network, and most recently, an e-commerce site with its release of the pay-to-play service Google Shopping (formerly known as Product Search).

All this, despite the fact that Google’s core philosophy – explained in a post titled 10 Things We Know to be True – pointedly says: “It’s best to do one thing really, really well.” Oh how the times have changed.

“You can make money without doing evil.”

But that’s not the only core principle that one-time lovers of the search giant have begun to question. Small and medium-sized businesses (SMBs) that have recently lost significant amounts of traffic from Google are worried that the search giant no longer lives by its founding principle: “You can make money without doing evil.” With display ads – expected to generate $2.31 billion in net revenues this year for the search giant – increasingly seen as an outdated form of advertising, and the CPC of Google ads decreasing by 15 percent, Google is exploring new sources of revenue generation.

Critics of Google have started questioning whether the company has begun quietly exploring a system of pay-to-play for placement in its search results, an accusation that Google firmly denies. But some are loudly questioning whether a company in control of 65.3 percent of search – processing more than one billion search queries a day – can be completely unbiased when creating a search algorithm in which its own products, and the products of its advertisers, are competing for rankings. Unfortunately for Google, those critics include the Federal Trade Commission.

Is the search giant stifling free competition?

Recently, the FTC launched an investigation to determine whether or not the search giant is engaging in anti-trust behavior and limiting free competition by manipulating search results to give favorable placement to its own products (like listings from Google Shopping or Google Places) and to companies that can afford to pay in the form of advertising. Similar charges were launched against Google in January when it rolled out Search Plus Your World, which incorporated Google+ content into its search results. Critics argued that the search giant was playing favorites with its own social media site at the expense of competitors like Facebook and Twitter. Both of which, it should be noted, are much larger, more robust networks with arguably more valuable social content.

FTC investigators are also looking into whether or not Google AdWords, the search engine’s advertising marketplace, discriminates against companies advertising on sites that Google considers competitors – like comparison shopping sites and consumer review sites.

Google vs. the small business owner … and thus, you

Whether intentional or not, many small businesses have recently seen dramatic drops in traffic that previously flowed through Google. The comparison shopping site NexTag saw a 50 percent drop in traffic from Google in recent months; the number is especially significant when considering that 60 percent of NexTag’s traffic comes from Google in the form of search and paid ads. NexTag’s response was to double the amount it spent on Google ads.

In a recent OpEd in the Wall Street Journal, CEO of Nextag Jeffrey Katz wrote, “[Google] has used its position to bend the rules to help maintain its online supremacy, including the use of sophisticated algorithms weighted in favor of its own products and services at the expense of search results that are truly most relevant.

“It’s easy to see when Google makes changes to its algorithms that effectively punish its competitors, including us. Our data … shows without a doubt that Google has stacked the deck. And as a result, it has shifted from a true search site into a commerce site – a commerce site whose search algorithm favors products and services from Google and those from companies able to spend the most on advertising,” Katz said, adding, “Google’s latest changes are clearly no longer about helping users.”

While NexTag was able to increase the budget it allocated to Google ads, other small businesses that also get the majority of their traffic from Google can’t afford to follow suit. Tim Carter, who runs AskTheBuilder.com, said in less than two years, daily traffic to his site dropped 87 percent – from 60,000 to 8,000.

“Google has decided, in their quest for higher profits, to put lower quality content on page one of their results. Much of the content now being served up on page one of Google results is either content created by advertising partners who are just interested in selling more of their products, or it’s content mashed up by work-at-home non-professionals who are feeding the gapping maws of the content farms,” Carter said.

On a Google search results page, the average click-through rate (CTR) for the first, second and third positions are 36.4 percent, 12.5 percent, and 9.5 percent respectively. That means the top three listings attract more than half of all click-throughs in a given search result. Companies whose listings don’t even make the first page better be destination sites, or have a strong flow of referrals from prominent sites, because they won’t likely get any substantial traffic from Google. And while this hurts businesses, the larger implication is that it hurts consumers.

“Google has drastically hurt my business, but it’s not about me,” Carter said. “It’s about the collateral damage being felt by tens of millions of consumers. These consumers are being deprived of great independent content written by experts with hands-on experience. This information is needed by consumers in this tough economy to make informed purchasing decisions,” Carter said.

“In my opinion, Google is absolutely engaging in anti-competitive behavior. I’m convinced they’re making side deals with the major content farms … If you want to know why Google changes their algorithm, just follow the money trail. It’s all about money.”

Buyer options get narrower

If the claims that Google is adjusting its search results to favor their own products and the products that advertise with it bear any truth, small businesses who can’t afford to increase their Google advertising budgets aren’t the only ones who stand to lose; millions of consumers who turn to Google each day for unbiased answers and find products will be affected too.

Companies that can afford pay-to-play aren’t always the ones with the best content; but if Google is guilty of what companies like NexTag and AskTheBuilder, among many others, allege, consumers searching online are exponentially more likely to end up clicking on promoted links and easily missing better results.

The biggest issue for consumers is that many of them don’t know that the search results are being tampered with. Craig Wildfang, an attorney with Robins, Kaplan, Miller & Ciresi who previously worked at the U.S. Justice Department, told CNET, “Part of the problem is that consumers may not know that their results are being manipulated in a particular way.”

Katz expressed similar concerns in his OpEd, writing: “Most people believe that when they type ‘convection microwave oven’ or ‘biking shorts’ into Google, they will receive a list of the most relevant sites. Not true. That’s how Google used to work. Now, when someone searches for these items, the most prominent results are displayed because companies paid Google for that privilege.”

Again, it’s important to note that despite the mounting criticism and evidence, Google has denied these allegations. In response to Katz’s claim, Amit Singhal, Senior Vice President, Engineering at Google wrote in a blog post, “Let me be very clear: our unpaid, natural search results are never influenced by payment. Our algorithms rank results based only on what the most relevant answers are for users—which might be a direct answer or a competitor’s website. Our ads and commercial experiences are clearly labeled and distinct from the unpaid results, and we recently announced new improvements to labeling of shopping results. This is in contrast to most comparison shopping sites, which receive payment from merchants but often don’t clearly label search results as being influenced by payment.”

Still, you can see in the screenshot below Google explains part of its shopping results are based on compensation from merchants. Google is up front with the fact that its shopping results are pay-to-play – but there are easily a great many users out there using the product without taking note of the disclaimer you see below.

Don’t like it? Well, you can leave

While Google denies manipulating its search results, supporters note that competitors like Bing, Blekko, and DuckDuckGo are just a click away. Google supporters also argue that whether or not the search engine is biasing its results, it’s their right to do so.

Kevin O’Connor, founder of DoubleClick and FindTheBest, a data-driven comparison engine, said regardless of whether it’s right or wrong, Google has the right to alter its search results as it sees fit, just as users have the right to search on other platforms if they don’t agree with what the search giant is doing.

“Google is doing what most of us would do if we ran the company—pursue growth opportunities. Google does bias their search results but they have that right given it’s their product. However, consumers can vote with their fingers and if Google gives poor search results, they will lose customers. There were many search engines before Google—Lycos, Excite, AltaVista—who once dominated the market but disappeared when they expanded beyond core search,” O’Connor said.

Slickdeals CEO Bryant Quan agrees. “I believe Google should be free to build whatever tools and services however they see fit, so long as they aren’t purposely suppressing competitors in organic search results.”

Really, the problem is being put solidly in consumers’ hands: Google is free to do what it wants, regardless of ethics or whether it works in our best interest – it is, at the end of the day, a company. But clearly, there are strong suggestions your Google searches are being influenced by factors not in your control. What you do with this knowledge is up to you. The options? Turning to other search engines, or if you’re issue is finding fair and balanced product results, you could opt for shopping-specific ones like Shopzilla, TheFind, or PriceGrabber. Or of course, you can continue to use Google Search or Google Shopping – just be sure to bring a discerning eye with you and try digging beyond the first few page results. You never know what you’ll find down there.